Category: Impact

The 2015 United Auto Workers union contracts with General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV allow the companies to alter hourly-worker health plans if they are likely to trigger a 40% federal tax on some high-cost health-care plans. The most likely change: adding yearly deductibles for affected workers.

Instead of more federal regulation and subsidies, what U.S. health care needs is adoption of market principles, starting with broad empowerment of the patient-consumer. The proposals advanced in this volume would replace many counterproductive and outdated federal policies with practical, market-based reforms that aim to provide all Americans with access to high-quality health care at affordable prices.

Last week, the U.S. Senate approved legislation that would repeal the majority of ObamaCare. The bill will almost certainly pass the House. From there, it will go to the president’s desk, where it faces an even more certain veto. Even so, we are witnessing a historic moment. The House and Senate have held dozens of votes to repeal ObamaCare in whole or in part. Congressional Republicans have even worked with President Obama to repeal or curtail portions of the law. But while full-repeal legislation has passed the House, nothing like the bill that just passed the Senate has come anywhere near the president’s desk.

Sen. Marco Rubio’s efforts against the so-called risk corridor provision of the Affordable Care Act, which was intended to help insurance companies cope with the risks they assumed when participating in the health care law’s new marketplaces, has shown the effectiveness of quiet legislative sabotage. Because of Rubio’s efforts, the administration says it will pay only 13% of what insurance companies were expecting to receive this year.

There is a political duty to prevent the coming bailout of big health insurers if Congress is serious about achieving repeal of ObamaCare. Individual Americans who have been harmed by the health care law aren’t eligible for an administration-provided bailout. Nor did doctors get help with the increased costs of bureaucratic compliance. Instead, the administration gave top priority to the interests of its corporate friends and supporters. This is crony capitalism at its worst.

The Affordable Care Act will make the labor supply, measured as the total compensation paid to workers, 0.86% smaller in 2025 than it would have been in the absence of that law, the Congressional Budget Office estimates. Three-quarters of that decline will occur because of health insurance expansions, which raise effective tax rates on earnings from labor—for instance, by phasing out health insurance subsidies as people’s income rises—and thus reduce the amount of labor that workers choose to supply.

ObamaCare is expected to cost the U.S. workforce a total of 2 million jobs worth of hours over the next decade, the Congressional Budget Office said Monday. The total workforce will shrink by just under 1% as a result of the new coverage expansions, mandates and changes in tax rates, according to the report.

To stay on the path of repeal and replace, ObamaCare opponents need to address three critical aspects of the effort. First is the question of risk-corridor payments under ObamaCare. These are the payments made to insurers with “excessive” losses from the plans they offer on the exchanges. A second important question is the “Cadillac” tax, which imposes a 40% excise tax on plans with premiums above certain dollar thresholds, and which would be fully repealed by the bill Congress will send the president. A third important question concerns another key feature of any credible replacement plan: tax credits.

Since the Affordable Care Act was implemented, the number of hospital merger and acquisition deals jumped from 52 in 2009 to more than 100 in 2014, according to Irving Levin Associates. But the economic evidence suggests consolidation drives costs up, not down – and may even hurt patient care. Two thorough literature reviews, from 2006 and 2012, found that hospital consolidation generally results in higher prices. And when hospitals merged in already concentrated markets, the price increase was dramatic, often exceeding 20%. If policymakers don’t find more ways to inject competition into hospital markets soon, bigger price increases are likely waiting just a few years down the road.

Last week, the Centers for Medicare and Medicaid Services released its official estimates of the uninsured population and of health spending. In 2014, ObamaCare’s coverage expansion fell between 6 and 12 million short of expectations, while driving the growth of health spending to its highest rate in 7 years. ObamaCare has only reduced the percentage of U.S. residents without health insurance by about 2%: a remarkably small number, and far lower than what the law was supposed to achieve.